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In an earlier article, Tim Mai explained Step 1 to Pre-Foreclosure Success-Organizing Your Office. Today, he will tell you about Step 2: Researching the Market and Qualifying Homeowners.

In the pre-foreclosure market, there are two keys to your success-finding homeowners who’ve tried to solve their financial problem and failed to do so and qualifying those homeowners. This puts in you in the position of working with motivated sellers, and that’s half the battle! In order to find these motivated sellers, you have to do some hard work and research several sources of information.

Essential Sources of Information

Below is a list of my favorite information sources. Keep in mind that you’ll be using a combination of these sources at all times. Don’t limit yourself to one or two. You want as many open highways to profits as possible.

• Courthouse offices-This is the first place to look so you can become familiar with your local and state government agencies handling foreclosures. The name of the agency varies with the state; it could be the county clerk, office of state register, registrar, etc. Find out if you can access foreclosure proceedings online. This is ideal since you’ll be able to download the list on to your computer quickly and easily. If the government office doesn’t have its records online, ask if there’s a foreclosure reporting service you can use. Keep in mind that, generally speaking, one of two foreclosure actions will be initiated by the lender’s attorney and will be available as a matter of public record-a Notice of Lis Pendens (judicial) or Notice of Default (non-judicial).

A Notice of Lis Pendens means “a pending lawsuit.” It describes the period between a filing of a lawsuit and when the case is heard in court.

A Notice of Default is a legal notice filed in the public record to let the public know that the mortgage or deed of trust is in default and is scheduled to be foreclosed on at a specified time.

• Newspapers-State foreclosure laws require that foreclosure notices be published in newspapers established as “newspapers of record” by the courts. Usually, this means the newspaper that has county-wide circulation and is read by the majority of residents within that county. Also, don’t forget to check the ads in the real estate section. Often, you can find owners advertising homes for sale in order to avoid foreclosure. Typical ads include phrases like “Foreclosure soon. Must-sell bargain”…”Home priced to sell fast to avoid foreclosure”…etc.

• Foreclosure Reporting Services-There are many foreclosure reporting services on line. Do a Google search to find ones that target your area. One of these companies is (www.HotBargainProperties.com/RealtyTrac).
• (Date)Dear Mr. (Mrs., Ms., etc.) Smith,

  My name is Jonathan Jones, and I’m a private real estate investor who would like to help you out. I see that your property is scheduled to be sold at auction on May 16 on the steps of county courthouse.

  I’d sincerely like to help you avoid the stress of a public auction. I have many different options available, including a quick sale that can create a win-win situation for both of us.

  I’m available at any time to help you work through the available options. Feel free to call me at 1-800-XXX-XXX, and I’d be happy to discuss different solutions to your problem.

  If I’ve made a mistake and your property is not scheduled for foreclosure, my sincere apologies!

  I hope to hear from you soon!

  Sincerely,

  Jonathan Jones

  Direct Mail-This can be an effective means of finding motivated sellers, but don’t use a “shotgun” approach and mail to everyone within your areas. It’s a waste of time and money. Instead, target those who are in foreclosure or who have some sort of financial distress. (See ZIP code targeting later in this chapter.) Also, make sure you mail several letters to these individuals, as many as four, five or six. People receive a lot of junk mail these days, so, more likely than not, they’ll throw your first letter out. But, if you’re persistent and consistent, they’ll eventually open one up and discover that you can offer them relief from a bad situation. Of course, send the letters well ahead of the foreclosure auction and space them out. For example, mail the first letter approximately eight weeks before the auction, then one per week after that. Another tip is to make your letter look as personalized as possible so it stands out from junk mail. Avoid the “bulk mail” look at all costs. Below is an example of a letter you can use as a template and modify to meet your own needs. Notice that it stresses benefits to the homeowner-avoid stress, creates a win-win situation, etc.

One of my favorite variations on direct mail is to send homeowners a non-negotiable check for anywhere from $5,000 to $15,000. I put the homeowner’s name on the check and, on the accompanying letter, say, “Call this number to get this money.” It lets owners know upfront how much money they can receive by dealing with me and provides a great incentive to make the call. An example of this technique is shown at the end of the chapter.

• Signs/flyers-Posting signs and flyers is one of my favorite methods of finding motivated sellers. However, be aware that the posting of signs may be illegal in your county or state. Check with local government officials before using this method. Signs can be as simple as:

HOUSES BOUGHT!

Contact me today!

1-800-XXX-XXX

Or

FACING FORECLOSURE?

We can stop it!

Call for a free consultation!

1-800-xxx-xxxx

Flyers can have similar language with more detail. For example:

SEEKING A QUICK SALE TO AVOID FORECLOSURE?

I can help! I’m a private investor who can help you get out from under your debt. I look at all properties, no matter what their condition.

Get rid of that stress by calling me at 1-800-XXX-XXXX

Or…

I WANT TO BUY YOUR HOME!

Financial difficulties? Recently divorced? Facing a transfer? I can help you out! Let me talk to you about buying your home so you can rid of unwanted stress.

I specialize in helping good people out of bad situations!

Call 1-800-XXX-XXXX

There’s more information to come on Step 2 in the next article, so don’t miss it!